Identifying Project Stakeholders

The process of identifying the stakeholders of a project takes place before the detailed planning stage of the project begins. This is because it is an essential input to the project plan. It is a two-stage process and each stage has its own purpose.

1st To identify who the individual stakeholders are.2nd To analyze the project's relationship with each stakeholder to establish their: level of engagement or interest in the project and their level of influence on it.

Both of these factors together will determine the best strategy to use when engaging them throughout the course of the project.

The important thing is to understand what it is that the stakeholder is seeking to protect, profit from or enhance. You can then structure your communications to let the person know that you are aware of their interest in the project and are taking it into account.

A stakeholder is defined as anyone with an interest in the project, irrespective of whether that interest is positive or negative. They may be individuals or organizations that are actively involved in the project, or whose interests may be affected by the execution or completion of the project. You can check out the complete range of project management pdf eBooks free from this website.

There are three broad categories of stakeholders:

Involved - this group would include the project manager, sponsor, and team members.

Affected - this group is more diverse and includes both internal and external entities, for example, other departments within the organization, customers, suppliers, regulatory bodies etc. In the case of a construction project, those affected might include also neighboring premises and the wider local community.

Exerting Influence - this group includes the press (local and national), environmental groups and other 'interest' groups (for example worker's rights) as well as departments within the performing organization that are not directly affected by the project but may wish to influence it in some way. This last group would typically include legal, financial and public relations departments.

Grouping stakeholders in this way is simply an aid to identifying them. These groups often overlap, and in the case of a software project the end-users would be both affected by the project and able to exert influence on it. The key issue is to make sure that all stakeholders are identified so that their influence can be assessed and planned for.

By understanding what each stakeholder wants from the project, and communicating with them according to their expectations, you can negotiate with them effectively and prevent problems from arising or at least mitigate the effect of any that do arise.

Ideally for each stakeholder, you will understand:
1) The 'stake' the stakeholder has in the project.
2) What the project needs from the stakeholder.
3) What the stakeholder expects or requires from the project.

It is important to identify the stakeholders early in the project, and to assess and analyze their levels of interest, expectations, importance and influence. They should then be classified according to their: Interest, Influence & Involvement. The assessment should be periodically reviewed during project execution to allow for changes.

The project charter is created early on in the initiating process group and formally authorizes a project or a phase and specifies initial requirements that satisfy the stakeholder's needs and expectations. It should answer the following questions:

1) What is the project going to do?
2) What is the business case for doing it?
3) Who wants it done?
4) Where is the money coming from?
5) Who is going to manage the work?
6) Who is going to do the work?

The project charter may describe some of the stakeholders along with their interests either in the project itself or the end-product/deliverable. As such, it can provide information about internal and external parties involved in and affected by the project, such as project sponsor(s), customers, team members, groups and departments participating in the project, and other people or organizations affected by the project.

Stakeholder Analysis involves identifying which stakeholders should receive project communications, what communications they should receive, and how often they should receive them in relation to their levels of interests, expectations, and influence. Remember, not all stakeholders need the same treatment. There will be significant differences in their interest in the project and some will be more important and influential than others. Stakeholder analysis can be broken down into two stages:

Stakeholder Identification - create a list of who has an interest, involvement or influence on the project. For each stakeholder define their level of authority and level of interest.

Stakeholder Impact Assessment - assess the type of impact they could have on the project and then prioritize and group the stakeholder list created in the first stage.

On completing this analysis the project manager is then in a position to develop a practical and effective stakeholder management plan and strategy.

The first action is to start making a list of anyone in a decision-making or management role that is impacted by the project, such as the: sponsor, project manager, and primary customer and to interview them. As a result of these interviews others will be added to your list to interview. You continue with this activity until you have added all potential stakeholders.

To ensure that the list is as comprehensive as possible you should also seek input from those with specialized training or knowledge of the subject area such as: Senior management, project managers who have worked on projects in the same area, experts in the business area, industry groups, and professional & technical associations.

You can then proceed to classify stakeholders according to level of authority and their level interest regarding the project. This can be done using a matrix grid that is similar to the risk matrix used in risk management, where certain events having low or high impact, and low or high probability.

A stakeholder can also impact a project in the same way that an event can and this must be assessed and planned for. The impact can potentially be both positive and negative and is measured in terms of interest and authority as shown in the grid below.

The strategy a project manager needs to adopt for each quadrant needs to take into account its level of interest and authority, which influences the level of impact it can have on the project. This knowledge will form a key element of how you manager each of your stakeholders.

Low (Interest) - Low (Authority) quadrant. These stakeholders need a simply strategy that will reassure them that the project is meeting their needs. They need the lowest level of management.

Low (Interest) - High (Authority) quadrant. This stakeholder group can wield significant power over your project and how you manage them must ensure they are kept informed accordingly retaining their valuable support. It requires a nominal amount of management time due to their low interest in the project, but must be specific to the stakeholder's role in the project.

High (Interest) - Low (Authority) quadrant. Neglecting this group just because their authority is low is a bad management strategy. Their interest in the project is high so your management efforts are greater than the previous group and focus on convincing them that their interests are being serviced.

High (Interest) - High (Authority) quadrant. As you would expect these stakeholders need the project manager to carefully and closely manage their ways to keep them informed and supportive as the project progresses.

The initial level of stakeholder analysis gives a broad qualitative analysis of the stakeholder's power and interest so that the broad strategy of engagement can be determined. This grid also indicates the level of engagement and influence each stakeholder has on the project overall, or in a particular phase.

The analysis then looks into the type of relationship a project manager should have with each type of stakeholder. It provides a means to assess the impact they can have on or level of risk their involvement brings to the project. This impact can be potentially positive, negative or neutral.

Classifying the project stakeholders in this way makes the stakeholder management strategy easier to develop later on. The following experts can assist in a complete identification of stakeholders: upper management, other organizational units (in functional organization), other project managers or project management office, subject matter experts in business or project area, industry groups or consultants, professional and technical associations, and regulatory bodies, non-governmental organizations.

Profile analysis meetings are used to develop understanding of major project stakeholders. Four key characteristics of effective and productive meetings are where everyone displays:

1) An understanding of the issues and topics being discussed.
2) Listens attentively and impartially.
3) Act with diplomacy to ensure all contributions are heard.
4) Avoids diversions by focusing on the discussion topic.

Almost all of the processes that form part of project management will involve meetings between the project manager, the team and other stakeholders in order to make decisions about the activity definitions and associated estimates. To learn about becoming an effective chair download our free eBook on this topic.

How well these meetings are conducted will have a major impact on how smoothly the project runs. The diagram above shows all the key characteristics the project manager, as chair of many of these meetings needs to display for them to be productive.

If you want to learn more about ensuring your project meetings are efficient then visit our online library page dedicated to Meeting Skills eBooks. These free resources cover all aspects of meetings including how to set an agenda that will ensure that the meeting achieves it's aims and how to chair a meeting so that it is as productive as possible.

Such meetings will form the basis of how you identify your project's stakeholders. The names of these individuals, groups and bodies are recorded in the Stakeholder Register, which includes classification and assessment information. This contains all details related to the identified stakeholders an example is shown in the table below.

This information is based on perception and explicitly describes each stakeholder from the perspective of the project at a specific point in time. This makes the register a potential to be a source of controversy and a document that must be treated with sensitivity.

Even though it is a legitimate document, in that it helps the project manager to communicate with all those listed, its accessibility and circulation must be strictly controlled to perhaps one or two trusted project staff in addition to the project manager.

For example, a departmental head might be described as having a negative attitude to the project because it will have an adverse impact on them personally. However, he or she could feel that they are being unfairly misrepresented in a way that could damage their future prospects within the organization.

Stakeholder analysis is so important that a wide variety of experts are consulted to help analyze the actual level and the desired level of engagement level of the various stakeholders. These experts are the same ones that were consulted in the previous step to identify the stakeholders and analyze their interest and/or influence on the project in order to determine the general strategy for engaging them.

In order to assess the level of engagement required from each stakeholder at each stage of the project, the following experts should be consulted:
• Senior management
• Project team members
• Other functional units within the organization
• Identified key stakeholders
• Project managers (who have worked on similar projects)
• Subject matter experts (SMEs) in business or project area
• Industry groups or consultants
• Professional and technical associations
• Regulatory bodies, non-governmental associations (NGOs)